Cancel debt to help poor countries adapt to climate change
Many of us may be following the Summit for a New Global Financing Pact happening in Paris, France. If like me you wondered what all this flying to fancy destinations for ‘high level talks’ has got to do with the price of tea in China, then this post might interest you. Briefly, the summit brings together global leaders in various fields to try and agree on better ways to finance responses to global issues as they impact poor countries. The focus of this summit is fighting poverty, decarbonization towards zero carbon by 2050, and the protection of biodiversity – each a grand challenge.
I read an Open Letter to the summit calling for, among other things, the cancellation of ‘colonial debt’ for low income countries (estimated to be at least US300 billion a year) for at least 4 years to help with the global climate response. I agree with this position because as I mentioned in my last two posts (here and here) agency is essential to adapting to climate change and income facilitates it. While facing the worst impacts and contributing the least to causing the climate crisis, poor countries are suffering from the inflation effects of COVID 19. They are struggling to secure livelihoods and invest in transformative adaptation to climate change and this debt makes it more difficult.
Big news coming from the summit was that Zambia secured debt relief by way of a 20 year payment plan of its US6.3billion debt, lauded as a “historic achievement” by French President Emmanuel Macron. I disagree with Macron on his reason for celebration, and I think the open letter has a much better offer for Zambia and friends. I believe that stretching national debt repayments during times of high global inflation will not lead to comparable savings as would be achieved by cancellation, even if just for 4 years. This means that, for all its hard work getting this far, Zambia may still struggle to finance its own climate response during and after the 20-year repayment period. Yet a clear and immediate break for an agreed period might be more rewarding for both Zambia and its creditors.
I have focused on this summit in this post because it’s about poor countries and their ability to respond to these grand challenges. We cannot expect leadership and innovation in the climate response from the Global South if they have a debilitating amount of debt hovering over their heads. It simply must be cancelled, if for an agreed period, for these summits to make a meaningful difference to global adaptive capacity. Anything less than this will only create new forms of dependency on development aid at a time when funding from some of the leaders in the field is being slashed.
COP26 set a goal for developed nations to double their collective provision of adaptation finance from 2019 levels by 2025 to achieve a balance between mitigation and adaptation. Cancelling this debt would be a significant show of commitment - a US300billion a year commitment to be precise.